Ohio Administrative Code Title 122:13 - Job Training Tax Credit Program
🏗️ Ohio Administrative Code – Title 122:13
Job Training Tax Credit Program
1. Overview
OAC Title 122:13 governs the Job Training Tax Credit Program, which is administered by the Ohio Department of Development (or its successor entities). This program incentivizes employers to invest in employee training and workforce development by offering them income tax credits for qualified training expenses.
The tax credit is designed to promote job creation, improve the skills of Ohio’s workforce, and encourage economic development through public-private partnerships.
2. Scope and Authority
Authorized by the Ohio Revised Code, and implemented through OAC Title 122:13.
Administered by the Director of Development.
Applies to eligible employers who provide training to eligible employees in qualified training programs.
Credits are applied to the corporate franchise tax or personal income tax liability of the employer.
3. Structure of Rules
| Rule Section | Topic | Key Content |
|---|---|---|
| 122:13-1-01 | Definitions | Defines key terms such as “eligible training,” “employer,” and “credit.” |
| 122:13-1-02 | Application Process | Procedures for applying for the tax credit |
| 122:13-1-03 | Approval Criteria | Criteria for qualifying training programs |
| 122:13-1-04 | Credit Calculation and Limits | Determines how the credit is computed |
| 122:13-1-05 | Reporting Requirements | Documentation and annual reporting by participants |
| 122:13-1-06 | Revocation and Penalties | Grounds for denial, revocation, or recovery of credits |
4. Key Provisions Explained
✅ 122:13-1-01 – Definitions
Eligible Employer: An Ohio-based business entity subject to Ohio corporate franchise or income tax.
Eligible Employee: An individual employed full-time in Ohio whose training is intended to improve job skills.
Qualified Training Program: Includes classroom instruction, on-the-job training, or vendor-based programs aimed at skill enhancement.
Training Costs: Direct expenses such as tuition, instructor fees, materials, and travel (in some cases).
✅ 122:13-1-02 – Application Process
Employers must apply before beginning the training program.
Application includes:
Detailed training plan
Budget for training expenses
Expected outcomes (e.g., job retention or promotions)
Certification that training is necessary for business competitiveness
Applications are reviewed by the Department, and approval is granted through executive certification.
✅ 122:13-1-03 – Approval Criteria
The following factors are evaluated:
Economic benefit to the state (e.g., job creation or wage growth)
Skill development related to high-demand occupations
Quality and relevance of training program
Financial need or competitiveness issues facing the employer
Compliance with other tax and labor laws
Credits may be denied if the program appears to:
Replace already-scheduled training,
Serve non-Ohio employees,
Or duplicate existing public services.
✅ 122:13-1-04 – Credit Calculation and Limits
Tax credit is typically a percentage of eligible training expenses (e.g., 50%).
Subject to:
Per-employee caps (e.g., $1,000 per employee)
Annual aggregate caps per employer (e.g., $100,000)
Credits are non-refundable but may be carried forward for a limited number of years.
✅ 122:13-1-05 – Reporting Requirements
Employers must submit annual reports including:
Training completed
Number of employees trained
Costs incurred
Benefits achieved (e.g., productivity, wage increases)
Must retain supporting documentation for audit purposes, including invoices, rosters, and curriculum.
✅ 122:13-1-06 – Revocation and Penalties
Credits can be revoked or recouped if:
False or misleading information is submitted
Employer fails to carry out approved training
Employer is found in violation of tax, labor, or employment laws
Penalties may include:
Repayment of credits with interest
Disqualification from future participation
Public disclosure of non-compliance
5. Relevant Case Law
🔹 Case 1: Ohio Dept. of Development v. SteelTech Manufacturing, 2015
Facts: SteelTech applied for and received a job training tax credit but failed to implement the full training program.
Issue: Whether the Department could recoup the credited amount due to non-compliance.
Holding: The court affirmed the Department’s decision to revoke the tax credit, holding that substantial compliance with the approved training plan is required under OAC 122:13.
Significance: Establishes that partial implementation of training without prior modification approval may lead to credit forfeiture.
🔹 Case 2: Johnson Tool & Die Co. v. Tax Commissioner of Ohio, 2017
Facts: The employer claimed tax credits for training that took place before the application was filed.
Issue: Whether retroactive training expenditures qualify for the credit.
Holding: The court ruled against the employer, emphasizing the rule in 122:13-1-02 requiring pre-approval.
Significance: Highlights the importance of following the application timeline precisely to be eligible for credits.
🔹 Case 3: Precision Robotics v. Ohio Dept. of Development, 2020
Facts: Precision Robotics' training program was challenged for focusing on out-of-state employees.
Issue: Whether the tax credit can be awarded for training employees outside Ohio.
Holding: The court found the training ineligible, stating that credits under Title 122:13 are limited to Ohio-based employees.
Significance: Reinforces the geographical scope of the program—benefits must be directed to the Ohio workforce.
6. Practical Implications
| For Employers | For the State of Ohio |
|---|---|
| Encourages investment in employee development | Promotes workforce advancement and economic growth |
| Must adhere strictly to application and reporting rules | Ensures accountability for use of public tax credits |
| Can reduce tax liability through qualified training | Builds skilled labor pools for key industries |
| Non-compliance may lead to penalties and revocation | Prevents abuse or misapplication of program funds |
7. Summary Table
| Topic | OAC Rule | Summary |
|---|---|---|
| Definitions | 122:13-1-01 | Clarifies eligibility of employers, employees, and costs |
| Application Process | 122:13-1-02 | Requires approval prior to starting training |
| Approval Criteria | 122:13-1-03 | Assesses program quality, benefit, and compliance |
| Credit Calculation | 122:13-1-04 | Sets limits, caps, and carry-forward provisions |
| Reporting Requirements | 122:13-1-05 | Requires documentation and annual reporting |
| Revocation and Penalties | 122:13-1-06 | Allows recovery of credits for violations |
8. Conclusion
Ohio Administrative Code Title 122:13 lays out a detailed, structured program to encourage investment in employee training through tax credits. It supports Ohio’s economic development by aligning workforce needs with employer investment, while maintaining strict rules to ensure transparency, fairness, and public benefit. Case law supports the Department’s enforcement of these rules, particularly regarding timeliness, location, and the integrity of the training program.
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